Deck 10: Acquisitions and Alliances

Question 1

Hubbard,Rice and Galvin present that the joint venture will be arguably most effective when:

A)each parent has equal influence over both the strategic and day-to-day operations of the venture
B)none of the parent firms has influence over both the strategic and day-to-day operations of the venture
C)one parent has a lot of influence over both the strategic and day-to-day operations of the venture
D)none of the above

Answer 1

C

Question 2

The Coles acquisition and later divestment of Myer was an example of:

A)a value-accruing transaction for both organisations
B)an effective turnaround process
C)a misaligned cultural fit that eventually led to divestment
D)all of the options are correct

Answer 2

C

Question 3

One of the integration issues relating to managing people in acquired company is:

A)how to avoid 'experience loss'
B)how to allocate authority among managers
C)how to hire more people
D)how to design the job

Answer 3

A

Question 4

Joint venture is NOT formed to:

A)gain benefits over other partners
B)allow a firm to achieve economies of scale
C)allow a firm to access to resources
D)provide a firm with joint research and development opportunities

Question 5

Anslinger and Copeland's study of leveraged buyouts and diversified corporations showed that:

A)they were classified as unrelated from a resource-based perspective
B)they produced high share market returns from strategies of making acquisitions
C)they were classified as related from a product-market perspective
D)they produced low share market returns from strategies of making acquisitions

Question 6

Success of acquisitions is conditioned by many factors except:

A)related acquisitions are more likely to be successful
B)unrelated acquisitions are rarely successful
C)unrelated acquisitions are more likely to be successful
D)organisations that make acquisitions frequently maximise their chance of success

Question 7

Haspeslagh and Jemison argued that the four types of capabilities that create value for acquisitions are:

A)resource-splitting,functional skill transfer,operational skill transfer,combination transfer
B)translation,resource transfer,functional skill-sharing,general management skill-sharing
C)functional upskilling,general management upskilling,resource upskilling,outsourcing
D)general management skill transfer,resource-sharing,functional skill transfer,combination

Question 8

Experienced managers argue that it is the ___ between the partners that binds them together:

A)legal agreement
B)relationship
C)financial interest
D)power structure

Question 9

A rational acquisition process involves five steps:

A)corporate espionage,option ranking,valuation,demand profiling,deal closure
B)intelligence gathering,share trading,ASX announcement,Part A Offer,Part B Acceptance
C)terms of payment,due diligence,negotiation,valuation,search for a target
D)advertise for acquisitions,data analysis,cash flow model,terms of endearment,purchase

Question 10

Joint venture is NOT used to achieve which of the following purposes:

A)strengthening the firm's existing business
B)taking the firm's existing products into new markets
C)obtaining new products that can be sold in the firm's existing markets
D)controlling the business of the partners

Question 11

One of the factors assessed by Haspeslagh and Jemison in their model of an integration process is:

A)need of strategic independence
B)need for organisational autonomy
C)need to preserve brand equity
D)need to maximise financial return

Question 12

In 'absorption acquisitions',the acquirer needs to ensure that ___ at the target switch ___ and ___ as quickly as possible:

A)employees,affiliation to,identify with the goals of objectives of the acquirer
B)management,loyalty,bonus schemes
C)plant and machinery,to preferred gas,electricity suppliers
D)shareholders,dividend preference,reinvest their distributions

Question 13

The 'trust' between partners is largely determined by:

A)financial power of partners
B)duration of relationship
C)dominance of one partner over others
D)market share of partners

Question 14

In testing the strategic logic for a joint venture,which of the following questions is NOT considered by the company?

A)Does it need a partner and for how long?
B)How big is the payoff for both parties?
C)Does the partner have necessary skills and resources?
D)Is a joint venture the best option?

Question 15

Since acquisitions are a way to implement strategy,which of the following general approaches is related to an acquisition made to increase market share and decrease costs?

A)The resource-based view
B)The industrial economics/positioning perspective
C)The managerial perspective
D)The power perspective

Question 16

Hubbard,Rice and Galvin define an acquisition as:

A)the sale of 50.1% of shares by an organisation on floatation
B)a mutually agreed consolidation under joint ownership of two organisations
C)the purchase of enough shares to obtain decision-making control over an organisation
D)majority ownership by 51% of directors

Question 17

Most of the empirical evidence about success in acquisitions is concerned only with acquirer and target shareholders.It shows that:

A)target shareholders do well
B)acquirer shareholders do well
C)both groups of shareholders do well
D)neither group of shareholders does well

Question 18

Leveraged buyout is a(n)___ of an organisation using a large percentage of debt to fund the ___.

A)merger,acquisition
B)acquisition,acquisition
C)acquisition,merger
D)merger,merger

Question 19

Hubbard,Rice and Galvin define a merger as:

A)a mutually agreed consolidation under joint ownership of two independent entities
B)an exchange of shares between two related parties
C)the purchase of 66% of shares to obtain decision-making control over another organisation
D)an activity engaged in to stimulate stock market waves

Question 20

In many industries,the winners will be the companies that:

A)avoid joint ventures because they are difficult to manage
B)only form partnership with companies which know how to manage joint ventures successfully
C)outsource the management of joint venture
D)most quickly learn to manage joint venture effectively

Question 21

Identify the reasons for creating joint ventures.

Question 22

In cross-border acquisitions,due diligence should only focus on cultural compatibility issues.

Question 23

Ownership of 51% of shares gives same level of control as 100% ownership.

Question 24

Explain some of the characteristics researchers found were associated with successful acquisitions.

Question 25

The objective of preservation acquisition is to preserve the green credentials of the acquired organisation.

Question 26

Explain what causes acquisitions to occur in waves and give examples.

Question 27

Explain the differences between absorption and preservation acquisitions.

Question 28

The first step of the rational acquisition process is 'conducting due diligence' of the target organisation.

Question 29

The reason for using M&A for most diversification is that it is a much faster process of growth and expansion.

Question 30

It is essential to acquire 50.1% of the shares to acquire another organisation.

Question 31

What are three general approaches to undertaking an acquisition? Identify a recent acquisition and explain which general approach you think the organisation used.

Question 32

Consider the distinct steps of the acquisition process and explain if all steps are equally important.

Question 33

The internationally used term 'M&A' recognises that there are few practical differences between mergers and acquisitions.

Question 34

According to Hubbard,Rice and Galvin,an alliance is a cooperative and positively competitive relationship between organisations.

Question 35

What are the four types of capabilities identified by Haspeslagh and Jemison that create value in acquisitions?

Question 36

Acquirers of publicly listed companies usually have to pay a premium in order to entice current shareholders.

Question 37

Explain why companies might want to undertake an alliance.

Question 38

Divestment is the other side of 'acquisition' - for every divestment there is an acquirer.

Question 39

Success of merger and acquisition is determined by the quality of strategic analysis,search and valuation.

Question 40

Briefly explain the care that should be taken in accomplishing the deal when establishing an alliance.

Question 41

What would you advise an organisation that is holding onto an underperforming business out of loyalty?